Greater Manchester

Combined Authorities – Why Birmingham doesn’t have a city region like Leeds

/ Chris Game

Chris Game.

“Cornwall leapfrogs West Midlands in devolution race” was the headline over one report of the Government’s recent devolution deal with Cornwall Council, giving the county greater control over adult skills spending and regional investment, and, with the Isles of Scilly, the prospect of integrating health and social care services.

For a West Midlands resident it seemed a depressing message – almost depressing enough to make one contemplate shooting the messenger. However, I happen to know him, so I’ve settled for shooting his metaphor, and in doing so providing a further update of events that could bring what I described in a previous blog as the most significant power-shift in English government in generations.

First thing to concede is that, predictably from this wholly centralist and Osborne-choreographed devolution exercise, it absolutely is set up as a race – certainly against time. It was outlined on p.63 of the Summer Budget’s Red Book:

“To fulfil its commitment to rebalance the economy and further strengthen the Northern Powerhouse, the government is working towards further devolution deals with the Sheffield City Region, Liverpool City Region, and Leeds, West Yorkshire and partner authorities, to be agreed in parallel with the Spending Review.”

We’ll return to the detailed wording later. The point here, apart from the redundant reminder of the Chancellor’s tunnel-visioned insistence on an elected mayor as the only acceptable accountability mechanism, is the Spending Review deadline, repeated a few paragraphs later:

“The government remains open to any further proposals from local areas for devolution of significant powers in return for a mayor, in time for conclusion ahead of the Spending Review.”

This week, a fortnight after the Budget and just seven summer holiday weeks before his chosen submission deadline, the Chancellor realized it would be useful for others to know the relevant Spending Review dates. Its conclusions, we learned, will be outlined on 25 November. But deal-seeking councils need to check p.15 of another Treasury document:

“City regions that want to agree a devolution deal in return for a mayor by the Spending Review need to submit formal, fiscally neutral proposals and an agreed geography to the Treasury by 4 September 2015.”

Numerous race analogies suggest themselves – obstacle, hurdle, handicap – but I see the devolution race less as a single race and more like the London Marathon – several races taking place simultaneously with different categories of participants starting off from different places at different times.

Take Cornwall. As the first rural council to negotiate a devolution deal, it clearly deserves credit, and doubtless its methods are being studied closely by other counties rushing to recruit partners and submit bids by the Chancellor’s deadline.

These county areas, though, are effectively in a different race from the big city regions. Their bids will vary greatly, in scale and aspiration, and in London Marathon terms their equivalents are perhaps the ‘Good for Age’ racers, who secure guaranteed entry by running a specified time considered good for their age group. They’ll hopefully win the appreciation of their friends and residents, but the big prizes will inevitably go to the Elite runners, the 150 miles a week guys, who need a certified 2 hours 20 time just to qualify, and sub-2 hours 10 to get into the serious prize money.

In the devolution race there’s only one elite entrant even to have glimpsed serious fiscal devolution-type money – Greater Manchester. The region starts with natural advantages, with its geographical and political coherence, and its 10-council team of runners was first out of the blocks in 2011, in applying to become the first Combined Authority (CA).

Moreover, they run as a team, agreeing to accept the race sponsor’s favoured elected mayor along with all that devolved funding, and now the prize money keeps arriving on a regular basis – most recently on Budget Day, when they won £30 million funding for ‘Transport for the North’ plus control of the fire service, Land Commission, children’s services and employment programmes.

Following the elite runners in the London Marathon are the Championship entrants – registered members of an athletics club, with a certified 2 hours 45 race time. The devolution equivalent is the exclusive Combined Authority club – still just the five members, those joining Greater Manchester being, to give them their official names, West Yorkshire, the North East, and the Sheffield and Liverpool City Regions.

West Yorkshire, Sheffield and Liverpool are actual or, in Liverpool’s case, near reincarnations of the areas’ 1972-86 metropolitan counties, and in that sense similar to Greater Manchester. The North East CA is different – hugely bigger than the former Tyne & Wear met county, but having at least the coherence of covering the same area as the North-East Local Enterprise Partnership (LEP).

As we have seen, the three former met county CAs were all name-checked by George Osborne in his Summer Budget speech – though few seemed to notice the precise names he used: “the Sheffield and Liverpool City Regions and Leeds, West Yorkshire and partner authorities” (my emphasis).

Having undertaken a serious resident and stakeholder consultation exercise back in March, North East leaders were rather peeved not to have made Osborne’s list. Since then, though, they’ve moved fast – not exactly embracing, but at least dropping their outright opposition to, an elected mayor, and opening talks on a “radical devolution deal” with Communities Secretary Greg Clark.

Temporarily at least, therefore, this might seem to put them ahead of Sheffield and Liverpool, but what exactly is happening in West Yorkshire? How is Leeds – unlike Birmingham, which has to make what noise it can under the ‘West Midlands’ banner – apparently managing to retain its nominal identity in its devolution deal?

Prior to the election, it was assumed that big city devolution deals would be negotiated with, where they existed, Combined Authorities. But then, in late June, Greg Clark delivered his remarkable eulogy to LEPs. These partnerships between business and councils were evaluated recently by the Royal Town Planning Institute as having “an opaque remit”, lacking “firm institutional foundations”, and being overly responsive to central government direction. In the new minister’s view, however, they represent:

“a phenomenal revolution [that has] completely changed the way investment and growth is done in this country. The areas that combined authorities are now following are the same areas defined by LEPs as being the true economic geography of our nation. As such, no devolution deal will be signed off unless it is absolutely clear that the LEPs will be at the heart of arrangements” (my emphasis).

Anyway, whoever’s verdict you prefer, LEPs are where Leeds City Region comes in. A city region is an economists’ and planners’ term to describe the functional region around a city – its ‘true economic geography’, as Greg Clark might put it. The label dates back at least to Derek Senior’s Memorandum of Dissent in the 1969 Redcliffe-Maud Report. But institutionally not much happened until the arrival in the late-2000s of Multi-Area Agreements (MAAs) – voluntary agreements between a number of local authorities and the government to work collectively to improve local economic prosperity.

There were eventually 15 of them. Of the big cities, those for Greater Manchester, South Yorkshire, Liverpool, and Tyne & Wear took the forms their respective CAs now do. But, instead of West Yorkshire, there was Leeds City Region, as shown in the accompanying map: the five former West Yorkshire metropolitan county boroughs, plus Barnsley from South Yorkshire, and Craven, Harrogate, York and Selby from North Yorkshire.

Leeds 1

MAAs were formally wound up by the incoming Coalition, but in practice most, like Leeds City Region’s, accompanied their authorities into their new LEPs. Which explains why West Yorkshire’s devolution bid is focused, as the Chancellor convolutedly but correctly described, on ‘Leeds, West Yorkshire and partner authorities’, or, more succinctly, Leeds City Region.

Not surprisingly, Birmingham also had a Multi-Area Agreement and a city region partnership, but in its case the emphasis is firmly on the past tense. It went under the catchy name of the Birmingham, Black Country and Coventry City Region and produced, among other things, an MAA for Employment and Skills. But it was short-lived, with Coventry soon opting out to concentrate on developing its links with Solihull and Warwickshire.

And there’s Birmingham’s devolution problem in a nutshell: no convincing city region. Instead of the pubescent MAA partners developing together, perhaps with the addition of adjoining authorities, into a single LEP corresponding to Clark’s ‘true economic geography’ of the city region, it split instead into three: Greater Birmingham & Solihull, which struggles to look convincing even on the map, the Black Country, and Coventry & Warwickshire.

west mids

The present situation is – how to put this – not exactly setting pulses racing. We have a recently, and for some unenthusiastically, agreed proposal for a Combined Authority of the seven former West Midlands metropolitan council boroughs – Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and, Wolverhampton – to run transportation, regeneration and economic development.

It clearly can’t claim, in Greg Clark’s words, to have any of its three LEPs “at the heart of arrangements” – although that could change with the possible addition of some or more councils in Warwickshire, Worcestershire and Staffordshire – a state of uncertainty that Police & Crime Commissioner David Jamieson, the West Midlands only elected official, described this week as “an absolute dog’s breakfast”.

Finally, far from it having been agreed that the CA should have accountability through an elected mayor, it apparently won’t have any individual leadership at all. Apart from numerous commitments to “collaborative working”, the Launch Statement has nothing to say about governance, although the understanding is that each council leader will take responsibility for an individual policy portfolio.

Returning to the London Marathon analogy, Greater Manchester obviously crossed the Mall finish line some time ago, has donned its foil blanket, collected its Virgin Money finishers’ medal, and is heading back up the M6. Several others are on that home stretch between Big Ben and Buck House, but it seems the WMCA still has some miles to go to reach the Embankment.

The future is analogue – confirms local government’s Honey Man

/ inlogov / Leave a comment

Chris Game

Of all the reactions to Northamptonshire County Council’s controversial ‘Next Generation Model’ – abandoning service provision in favour of outsourcing everything to ‘specialist social enterprises’ – few can have been as measured and dispassionate as my colleague Ian Briggs’ reflections on the merits or otherwise of Public Interest Companies (PICs).

Personally, it came as a bit of a blast from the past. Typing that opening paragraph, I really couldn’t recall when I last consciously thought about that particular three-letter initialism that once seemed to feature in a good proportion of my lectures. Especially following the 2004 Companies Act, PICs were ubiquitous, and taxonomising them – and/or CICs (Community Interest Companies) – quite a fad: national and local, companies limited by guarantee, industrial and provident societies, limited companies owned by service users, unincorporated associations, social firms, share trusts, mutuals, co-operatives.

So, rusty as I am, I admit to being curious about how Northamptonshire’s down-sizing vision works out once it leaves the drawing board. This blog’s concern, though, is not Northamptonshire’s or any other single council’s future, but that of English local government as a whole – which, in a neat triad of happenstances, was also addressed last week, in the final report of the Independent Commission on Local Government Finance (ICLGF), Financing English Devolution.

The third part of the triad, unfortunately, is directly relevant only to those of us residing within reach of Birmingham’s fine Repertory Theatre, which also last week staged a highly successful production of Tyrone Huggins’ play, The Honey Man. So, three disparate events from which, if you’ll bear with me, I’ll attempt to draw a coherent theme.

The ICLGF was established by the LGA and CIPFA, and is chaired by Darra Singh. The former chief executive of Ealing and Luton Councils bears little physical resemblance to the St Kitts-born author/actor Huggins, but, if his report has the transformative impact he obviously hopes, he could reasonably claim in, say, a decade’s time, to have been English local government’s Honey Man.

Digitals see the world in terms of ones and zeros, black and white, right and wrong answers, clearly defined systems. Analogues understand and deal in approximations, probabilities and muddle, 50-plus shades of grey.

Successive governments – ministers and civil servants both – have tried for years to run local government as a single, centrally controlled, one-size-fits-all digital system. ‘Honey Man’ Darra Singh’s message is that, while local services will be delivered increasingly digitally, the delivering ‘system’, insofar as there is one, will be increasingly analogue.

Huggins’ Digital Projects have not been that extensively performed. Even so, it would be hard for their collective impact to have been any less than that of the first three efforts in the Local Finance Reform Quartet: the Layfield Committee (1976), the Balance of Funding Review (2004), and the Lyons Review (2007). All three started from the premiss that the status quo is unsatisfactory – lacking transparency, fairness, balance, and accountability – and major reform vital. Yet all were either ignored or, in Lyons’ case, attacked and effectively rejected by ministers within hours of publication.

This time, the reflex rubbishing was administered by Local Government Minister Kris Hopkins, who immediately dismissed the Commission’s proposals for local areas to determine the number and value of council tax bands, and for tax increase referendums to be abolished.

No change there, then – and clearly there won’t be from the present Conservative-led coalition. The question is whether the new lot after May accept that this time the Commission really isn’t crying wolf: that the future now facing many, if not most, councils – severely less money, increasing and more complex service demands, and cripplingly limited scope to raise additional revenue – really has regressed from unsatisfactory to unsustainable.  And recognise too that, following core grant cuts of 40%, radical reform is no longer urgent but imperative – if, that is, anything resembling a viable, democratically accountable, service-providing local government sector is to have a future.

There is of course, and always has been, an alternative: the wholly Contracting Council, famously envisioned in the 1980s by Conservative Environment Secretary Nicholas Ridley as meeting once a year to award all the council service contracts to private firms. A number of councils in recent years have gone some way down that road – most notably perhaps Suffolk and Barnet – and now Northamptonshire is preparing to go a good deal further.

Northamptonshire County Council, employer ten years ago of nearly 20,000 full- and part-time staff, plans in future a workforce of 150 max, with services formerly provided by the council or by council-run companies and partnerships being commissioned from external organisations: a Children’s Services Mutual, an Accountable Care Organisation for vulnerable adults, a Wellbeing Community Organisation, and a Place Shaping Company “to deliver services to improve Northamptonshire as a place”.

It’s analogue service provision alright, and pioneering, but not in the quite the form the Commission’s final report sets out. Nor last October’s interim report, although, reflecting the quite startling speed with which events have moved since the Scottish independence referendum, the two documents do have differing emphases.

The interim report, Public Money, Local Choice, underlined the need for council tax reform and for a desperately overdue property revaluation and banding revision.  But the headlines it earned were all about how, through full – rather than the present partial – retention of business rates and appropriate ‘equalisations’ between richer and poorer councils, English local government could by 2018-19 become financially self-sufficient and independent of central government grant funding.

There was an interim vagueness about how these equalisations would be managed, and a somewhat cavalier assertion (p.18) that “there is less disparity in wealth between the different parts of the country than in often assumed.”  The brief equalisation discussion, though, like the report generally, focused on individual local authorities, even down to numbers of toppers and toppees: “On 2018-19 projections, self-sufficiency would require 247 councils to ‘top up’ 106 councils. Most of this could be managed through transfers between councils in the same area.”

There was a passing reference to Combined Authorities perhaps playing a part in this redistributive process, but otherwise no mention of these institutions that since then have so dominated local government discourse – while the Pioneer Authorities that take centre-stage in last week’s final report weren’t even embryonic.

The Commission’s blueprint isn’t as immediately arresting as Northamptonshire’s and its timescale is inevitably longer. But, if even substantially implemented, the shift of the central-local balance from Whitehall and Westminster to English cities and regions would be profound. Following a 10-year devolution programme, more than £200 billion of annual public spending would be controlled at ‘sub-national’ level – or twice the current total of English local authorities’ net revenue service expenditure.

The key analogue feature of the Commission’s programme is what tekkies would call its two- or variable-speed gearbox. All councils would have multi-year funding settlements, freedom to set council tax and tax discounts, and would retain 100% of business rates and business rate growth.

But there would also be ‘Pioneer’ authorities: combined authorities wishing and judged able to reform at a faster pace. These could vary council tax bands and undertake their own revaluations, have access to new or devolved taxes like stamp duty, tourism and airport taxes, and, most significantly, would control single place-based budgets covering a full range of public services, including transport, community safety, and – starting already with Greater Manchester – health.

As the Honey Man’s Commission notes, the analogue principle of variability has already been established, with city deals and devolution packages to Combined Authorities. These latter are clearly the key – which is why the honey coming the way of Birmingham and the West Midlands so far has been mostly the unblended stuff, while Greater Manchester is already onto the organic.

Chris Game - pic

Chris Game is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

An earlier, more Birmingham-focused version of this blog appeared in The Chamberlain Files.

Devo max – what it is and why it won’t happen

/ inlogov / Leave a comment

Chris Game

Devo Max – it sounds like a 99% efficient toilet cleaner, or a dodgy West Country car dealer, but either way I visualise its initials in upper case. And that’s its problem. It’s undoubtedly the ‘must use’ expression of the month. It’s not complicated, like ‘full fiscal autonomy’ or the Barnett formula, so anyone feels able to drop it authoritatively into even casual conversation. And everyone has their own idea of what it is.

For party leaders, desperate to save the Union in the final hours of the Scottish referendum campaign, it was perfect Looking-Glass, Humpty Dumpty-speak: it means just what we choose it to mean.  Sign up now, check it out on Friday the 19th.

For YesScotland campaigners it was a verbal Blob, impossible to pin down and attack – and especially frustrating, as they were the ones who had no need to check it out. They knew its precise meaning because they’d invented it, and knew that it wasn’t at all what most wavering voters imagined they were being offered.

It actually originated in a 2009 Scottish Government options paper, Fiscal Autonomy in Scotland. Five distinctive options were spelt out, ranging from the SNP Government’s preferred full fiscal autonomy (FFA) in an independent Scotland to a minimally changed current fiscal framework, which gave Scotland considerable discretion over spending but little over tax revenue raising, borrowing, or broader monetary policy.

‘Devolution max’ was the SNP’s fall-back option, clearly defined as FFA within the UK. The Scottish Government would be responsible not only for most of the public spending in Scotland, but for raising, collecting and administering virtually all revenues – instead of the estimated 15% it would control even after the 2016 implementation of the 2012 Scotland Act, the famously “biggest transfer of fiscal powers in 300 years.”

game

The precision of its definition, as well as its content, makes Devo max entirely different from the third option of merely ‘enhanced devolution’, which really does sound vague, manipulable Humpty Dumpty-speak, and hardly surprisingly is unacceptable to the SNP.

Devo max, though, is not just definable. It can, its advocates would claim, be viewed and studied in practice, for it broadly resembles the system in the northern Spanish autonomous communities of Navarre and the Basque Country. Part of their autonomy is that the devolved governments are responsible for raising and collecting all direct taxes, including corporation tax, although, to conform with EU legislation and retain a harmonised social security system, indirect and payroll taxes remain centralised. The two regions have used their powers to lower certain taxes below the rates elsewhere in Spain, thereby creating a relatively more competitive tax regime, which is, of course, also an SNP aspiration.

The problem, as critically noted by the 2009 Calman Commission on Scottish Devolution (ch.3), is that Scotland – constitutionally, economically, as well as meteorologically – isn’t Spain.   A tax-based FFA might be operable in Spain, and at least conceivable in an independent Scotland.  However, attempted within the UK, it would clash with the Treasury’s expenditure-based economic model and its pooling and redistribution of taxes to fund common standards of public services and welfare benefits.

Tax experts will argue that the devolution of some additional taxes – personal income tax, land and sales taxes, alcohol and tobacco duties – is perfectly feasible and even desirable. In other cases, though, for combinations of practical, legal and political reasons, it is less feasible, and heading this list in the UK are usually the highly desirable corporation tax and the highly disputed oil and gas revenues.

In the UK, then, full fiscal autonomy short of independence is unattainable, and, even if attainable, would be effectively incompatible with the redistributive policies of our existing welfare state, and also with the controversial population-based Barnett allocation formula that all three major party leaders committed themselves to retain in their extraordinary orchestrated ‘Vow’ on the front page of the Daily Record.

So, whatever additional powers Scotland eventually gets, they won’t amount to Devo max. It might, therefore, be a good idea if we stopped trying to appropriate the label rather meaninglessly for English local government (with perhaps one exception), and looked instead to the persuasive and realistic cases already being made by those with first-hand experience of running local authorities.

By all means, use Scotland as a benchmark – as in the challenge issued by Graham Allen MP, Chair of the Commons Political and Constitutional Reform Committee: “I don’t see any reason why English councils are not capable of taking on the powers that go to Scotland.”  And London as another. The legislation is different, but the key recommendations of last year’s neatly titled report of Tony Travers’ London Finance Commission, Raising the Capital, are both applicable to other major authorities and possibly more straightforwardly implementable – particularly the proposed control over all property taxes: council tax, business rates, stamp duty land tax, capital gains property development tax, and the like.

It’s been good this past week to see the County Councils Network, with its pre-election Plan for Government, 2015-20 and the Key Cities Group of 23 mid-sized cities with its Charter for Devolution, both determined not to have their distinctive voices and proposals drowned out by the noise of the big cities.

There’s no doubt, though, that it’s in and around the big or the eight Core Cities where the main devolutionary action is, and particularly those who’ve been able create Combined Authorities. These are legal structures set by the Secretary of State following a request from two or more English authorities and a governance review. They may take on transport, economic development and potentially other functions, and they have a power of general competence.

They were a third-term New Labour idea, and the enabling legislation – the Local Democracy, Economic Development and Construction Act – was a full five years ago now. Greater Manchester CA, bringing together 10 authorities, was first in the field in 2011 and for some time out on its own, but since April we have had four more – West Yorkshire (5), Sheffield (4), Liverpool (6), and the North-East (7). There are reports too that councils in Derbyshire, Nottinghamshire and Buckinghamshire, as well as the Welsh Local Government Association, are all at least considering combined authorities as an alternative to a possible future of enforced mergers.

If anything, though, Greater Manchester is stretching its early lead, with its reluctant agreement to a directly elected mayor in exchange for the “complete place-based settlement” proposed on its behalf by the independent think tank, Res Publica – “an incremental process leading to the full and final devolution of the entire allocation of public spending”. Even this, for the reasons given above, wouldn’t technically amount to Devo max, but since they already seem to have appropriated it in the cause of alliteration – Devo Max – Devo Manc: Place-based public services, it’s the one exception I’m prepared to concede.

game

Chris Game is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.